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Bids for the late Michael Erceg's Independent Liquor were lodged yesterday, bringing more than a year of speculation about the company's future close to a conclusion.
Observers of the deal are not expecting a quick result. Brewer Lion Nathan - and a consortium made up of staff and two private equity funds - are tipped as the two strongest bidders.
The observers expect Independent - which has carved out a dominant position in the local ready-to-drink market and a big share in Australia - to fetch around $1 billion.
UBS, which is running the auction on behalf of the late Michael Erceg's widow Lyn, did not respond to requests for comment. And Erceg's lawyer Darryl Gregory was not available.
Lion is expected to be the strongest bidder because it has the most to gain from integrating the Independent operations with its own.
It would get a strong position in a rapidly growing market. Lion is also selling its central Auckland brewing site. If its bid were successful, its New Zealand centre of operations would be moved to Independent's site in South Auckland. Lion Nathan is said to be considering issuing securities that combine characteristics of debt to help fund its bid.
Meanwhile, talk has emerged that the less-than-friendly history between Independent and Lion would prevent Erceg's widow from selling to the brewer. The brewer is said to have used aggressive tactics to frustrate Independent's entry into the market.
However, this has been interpreted as scuttlebutt intended to keep the private equity consortium - made up of Pacific Equity Partners, Nikko Principal Investments and management - in the hunt and maintain pressure on Lion.
The Australian Financial Review yesterday reported the private equity consortium was "heavily wooing" Independent's senior management and Lyn Erceg to accept their bid. The paper reported the consortium had increased their offer of a share in the business to management who participate in a buyout.
Other bidders thought to be in the the fray include Foster's, Asia Pacific Breweries - owner of local brewer DB - and UK drinks giant Diageo.
Foster's said yesterday it would have to raise funds if it were to make a bid. Chief executive Trevor O'Hoy said his company was watching the sales process closely.
- Additional reporting AAP
